De Lotbiniere v. Wachovia Bank & Trust Co.

163 S.E.2d 59, 2 N.C. App. 252, 1968 N.C. App. LEXIS 911

• Court: Court of Appeals of North Carolina
• Decided: September 18, 1968
• Docket: No. 68SC225
• Status: Published

Opinion

Morris, J.

Two questions are presented by this appeal: (1) Is the 1936 judgment, adjudging that the children of Mary Agnes de Lotbiniere together with Richard and Anthony Temple, have a vested interest in the estate of W. J. Slayden, valid and binding upon the minor respondents and all unborn issue of Mary Agnes de Lotbiniere? and (2) Did the court err in making distribution of income?

The guardian ad litem strenuously contends that present minor and possible unborn respondents were not before the court in the 1936 action by reason of the appointment of a guardian ad litem and are hot bound by any judgment entered in that action. He further contends that this is not cured by G.S. 1-65.1, and G.S. 1-65.2, and G.S. 1-65.4, providing for the appointment of guardians ad litem for minors and possible unborn persons, for that to make these provisions retroactive would constitute a deprivation of the property of the minors and possible unborn persons without due process of law.

G.S. 1-65.2 provides:

“In all actions and special proceedings in rem and quasi in rem and in all actions and special proceedings which involve the construction of wills, trusts and contracts or any instrument in writing, or which involve the determination of the ownership of property or the distribution of property, if there is a possibility that some person may thereafter be born who, if then living, would be a necessary or proper party to such action or special proceeding, the court in which said action or special proceeding is pending, upon motion of any of the parties, may appoint some discreet person to act as guardian ad litem, to defend on behalf of such unborn person. No prior service of summons or other process upon such unborn person shall be required, and service upon the guardian ad litem appointed for such unborn person shall have the same force and effect as service upon such unborn person would have had if such person had been living. All proceedings by and against the said guardian ad litem after appointment shall be governed by all provisions of the law applicable to guardians ad litem for living persons.”

G.S. 1-65.4 provides:

“The remedies provided by §§ 1-65.1 to 1-65.3 are in addition to any other remedies authorized or permitted by law, and they shall not be construed to repeal or to limit the doctrine of virtual representation or any other law or rule of law by which unborn persons or nonexistent corporations, trusts or other entities may be represented in or bound by any judgment or order entered in any action or special proceeding. Sections 1-65.1 to 1-65.3 shall apply to all pending actions and special proceedings to which they may be constitutionally applicable. All judgments and orders heretofore entered in any action or special proceeding in which a guardian or guardians ad litem have been appointed for any unborn person or persons or any nonexistent corporations, trust or other entities, are hereby validated as of the several dates of entry thereof in the same manner and to the full extent that they would have been valid if §§ 1-65.1 to 1-65.3 had been in effect at the time of the appointment of such guardians ad litem; provided, however, that the provisions of this sentence shall be applicable only in such cases and to the extent to which the application thereof shall not be prevented by any constitutional limitation.”

In McPherson v. Bank, 240 N.C. 1, 81 S.E. 2d 386, before the Supreme Court in 1954, trustor and his children, primary beneficiaries of a trust, brought an action against the trustee, minor grandchildren of trustor, and all other persons in esse or not in being “who are now or might by any contingency become beneficiaries of or entitled to any right, title, or interest in” the trust estate. A guardian ad litem was appointed to represent the minor grandchildren and “all other persons, ... in esse or not in being, who are now or might by any contingency become beneficiaries” of the trust. The trial court entered judgment allowing the amendment requested. The guardian ad litem appealed. The opinion, Johnson, J., speaking for the Court, cast considerable doubt upon the legality of the practice of having a guardian ad litem appointed to defend and represent infants in posse who might have an interest in the trust estate. The Court noted that the guardian ad litem had limited his representation to the grandchildren to the exclusion of possible unborn children of trustor and said:

“Indeed, no such direct representation by guardian ad litem is sanctioned by law. The rule is that, in the absence of statute, the capacity to be sued exists only in persons in being, (citations) With us, in the absence of statute, an unborn infant cannot be made a defendant in an action and be represented by a guardian ad litem. Deal v. Sexton, 144 N.C. 157, 56 S.E. 691. No statute has been called to our attention, and our investigation discloses none, authorizing the joinder of possible unborn children in an action like this one.”

The Court noted that G.S. 41-11.1 appeared to be limited to actions involving the mortgage, sale, or lease of property. For the reasons given, the Court held that the judgment rendered was inconclusive as to the interests of possible unborn children of trustor.

G.S. 1-65.1 through G.S. 1-65.4 were enacted by the 1955 General Assembly. Appellant argues that the defect, if any there was, is not cured by legislative enactment, because to make G.S. 1-65.1 retroactive, as provided by G.S. 1-65.4, thus making minor and unborn respondents bound by the 1936 judgment, would be unconstitutionally to diminish the estate which would ultimately go to them. Appellant relies on Trust Co. v. Andrews, 264 N.C. 531, 142 S.E. 2d 182. We do not agree that that case is controlling. There the sole question before the Court was whether certain adopted children were beneficiaries along with natural children of the trust estate. The statute in question was G.S. 48-23, which had been rewritten since the death of the testator and gave to adopted children the same legal status as if they were bom the legitimate children of the adoptive parents. The guardian ad litem for the adopted children did not argue that the statute divested vested rights, but argued that it created a presumption that the words “great niece” and “great nephew” were understood by testator to include both natural born and adpted children. The Court held that the statute clearly stated it had no application where the terms of the instrument made it plainly apparent that the maker had a contrary intent, and the testator, by the language of his will, clearly expressed the intent to exclude adopted children from the trust he created by his will.

Here the appellant does not contend that the minor and unborn children (grandchildren of Mary Agnes de Lotbiniere) represented by a guardian ad litem in the 1936 action had any vested interest in the trust estate. It is, of course, conceded that the Legislature may not constitutionally destroy or interfere with vested rights, but it may enact valid retroactive legislation affecting only expectant or contingent interests. Anderson v. Wilkins, 142 N.C. 153, 55 S.E. 272; Springs v. Scott, 132 N.C. 548, 44 S.E. 116. The Springs case discussed the constitutionality of retroactive application of Chapter 99, Laws 1903 (now G.S. 41-11). There a special proceedings had been instituted for the sale for partition of lands devised under the will of Julia Springs. The will provided that Alva Springs should share equally with the rest of the children “but he can only receive the interest during his life; at his death the interest will be paid to his children until they are of age, and if no children or heirs of his body, it must be equally divided among his brothers and sisters or their heirs. I appoint Eli Springs his trustee.” The trustee was a party. Alva Springs, at the time of the proceedings, had no children. The defendants objected on the ground that it could not be known who the heirs would be, who would be entitled to take at the death of Alva C. Springs and those heirs were not parties. The Court held that the judgment of the superior court affirming the clerk’s order of sale was correct for that all persons either in esse or in posse were bound by reason of the fact that the trustee was a party and authorized to represent all parties in interest and further that the statute was constitutional and applicable retroactively since the interests of those not in being were not vested.

We are of the opinion and so hold that any defect in the 1986 proceedings by reason of the appointment of a guardian ad litem was cured by the enactment of G.S. 1-65.2 through G.S. 1-65.4 and that the minor and unborn respondents, grandchildren of Mary Agnes de Lotbiniere, are bound by the terms of the judgment entered.

But the appellant also contends that the 1936 judgment was void because erroneous in that it was inconsistent in its provisions. Appellant argues that in finding of fact No. 4 the court found that the children of Mary Agnes de Lotbiniere have a vested interest in the income heretofore accumulated and hereafter to accumulate and by a portion of finding of fact No. 5, “in the event said Mary Agnes de Lotbiniere has no other children born to her, will be the sole owners of the entire amount of said estate, including corpus and income,” states their interest is contingent. We find no inconsistency. The court clearly states that the children, plaintiffs in the action, have a vested interest in the income and if no other children are bom to their mother, will at death own the entire estate. This merely reaffirms the vested interest in income and points out a contingent interest in the corpus. However, even should it be conceded that the judgment was erroneous, it is not void and the parties are bound by it. No appeal was taken and the interests of the unborn and minor respondents, grandchildren of Mary Agnes de Lotbiniere, are not vested. Smathers v. Insurance Co., 211 N.C. 345, 190 S.E. 229.

We are not inadvertent to the legal presumption of the possibility of Mary Agnes de Lotbiniere’s having other children. Hicks v. Hicks, 259 N.C. 387, 130 S.E. 2d 666. The evidence was that at the time of the hearing she was 79 years of age and not in good health. The record shows that in no order thus far entered has there been a direction to the trustee to pay out all of the annual income of the trust nor all of the accumulated income of the trust.

As we have already noted, the Legislature may not constitutionally destroy or interfere with vested rights. This being true, the enactment of G.S. 1-65.2 through G.S. 1-65.4 does not have the effect of making the 1936 judgment binding on the children of Mary Agnes de Lotbiniere not in esse. Under the facts of this case, we do not think the doctrine of virtual representation can be applied to bring them before the court and thus make them bound by the judgment. McPherson v. Bank, supra. We, therefore, are constrained to hold that as to the unborn children of Mary Agnes de Lotbiniere the 1936 judgment is not res judicata.

The appellant’s remaining assignments of error are addressed to the court’s ordering increased payments of income and a present distribution of accumulated income. The findings of fact with respect to the size of the trust estate, accumulated income, annual income, needs of the beneficiaries, their changed circumstances, are all amply supported by the evidence. We find no abuse of discretion.

For the reasons stated herein, this matter is remanded for the entry of judgment providing that the unborn children of Mary Agnes de Lotbiniere are not bound by the 1936 judgment and directing that sufficient income shall be retained to enable the trustee to make pro rata payments of income to or for the benefit of any child or children of Mary Agnes de Lotbiniere who might hereafter be bom.

Error and remanded.

Campbell and Beitt, JJ., concur.